US stocks failed to capitalize on the unprecedented measures taken by the Fed to lift the domestic economy, as the Senate failed again to push through the coronavirus bill. The Dow and S&P 500 fall roughly 3 percent overnight. However, market sentiment has improved substantially in Asia, digesting the Fed’s move. Stocks in Tokyo and South Korea rose nearly 7% while Australia’s S&P-ASX 200 added almost 3% and China’s Shanghai Composite Index rose 1.7%.
The Federal Reserve announced a broad slate of programs to make sure credit flows to businesses and consumers amid the coronavirus outbreak. Meanwhile, Treasury Secretary Steven Mnuchin said that the Congress was very close to passing a stimulus package, which added to investor optimism.
In Europe, stocks jumped amid some signs that the coronavirus spread may be slowing in Italy, the worst-hit country in the region. As a result, Italy’s FTSE MIB rallied over 6%, the German DAX 30 also gained more than 6% while the French CAC 40 jumped 5% on Tuesday.
On the data front, the Eurozone service PMI dropped to a record low of 28.4. The decline was even more aggressive than during the financial crisis. The composite index dipped to 31.4 – much below the 36.2 reported eleven years ago. In Germany, the services PMI posted the biggest loss down to a record low level of 34.5. The manufacturing PMI dropped to 45.7.
Despite the dismal data, EURUSD preserved its upside momentum and even registered fresh four-day highs around 1.0880 amid a broad-based dollar weakness in the wake of massive stimulus measures unveiled by the Federal Reserve. However, the current bounce in the common currency may be short-lived, as the upside potential still looks limited at this stage. The immediate resistance now arrives at 1.09.
In other markets, gold prices have been extending gains for the third day in a row. The bullion jumped to nearly two-week highs marginally below the $1,600 psychological handle. A daily close above this level will confirm the latest bullish breakout and could open the way to further gains ahead. The current bullishness in gold prices is mainly due to a weaker greenback following stimulus packages from the Fed.